Albania readies power imports to make up for drought

TIRANA (Reuters) - Albania is working to arrange the import of electricity worth up to 90 million euros ($124.93 million) to make up for the loss of domestic output caused by a drought, officials said on Friday.

The Balkan state, which relies almost entirely on hydro power plant to produce electricity, has seen water flows to its power stations cut by 40 percent in another year of little rain.

Finance Minister Shkelqim Cani said this year's rainfall and snow, below the decade-average by more than a third, meant Albania had "very serious problems with energy".

"We have one month to find alternative sources because we shall import 100 million to 200 million euros of additional power, outside the budget," Cani told a local television.

If the drought costs overshot forecasts, "I would naturally say we shall cut investments, review the budget," Cani said before leaving for meetings at the International Monetary Fund.

Energy Minister Damian Gjiknuri told Reuters the government was ready to deal with a "pessimistic or average" scenario should the current weather and limited rainfall persist.

Albania will cope by better managing the lakes of its three power stations on the northern Drin River, swapping electricity with neighboring Kosovo and importing, he added.

"Given this sort of prediction ..., we would go to 80-90 million euros of imports of electricity from KESH, the wholesale supplier," Gjiknuri told Reuters Television in English.

A finance ministry official told reporters the government had already found a "big chunk of the money" for the power imports. Asked how much that would be, the official said: "No less than a 100 million euros".

Gjiknuri said weather changes in the autumn could reduce the need. Temperatures on Friday dropped by up to 7 degrees centigrade and it snowed in northern Albania.

Describing electricity theft as "entrenched" in Albania and a "drain on the financial health of the country", Gjiknuri said the Socialist-led government that took power in September last year "was strongly dealing with the losses".

"I think every month we have a reduction of losses. If I make a comparison, in October the losses were around 52-53 percent, and today they are around 42 percent," Gjiknuri said.

The International Monetary Fund, which lent Albania 330.9 million euros ($459.32 million) for its external financing needs and reforms in February, advised it to "initiate energy reform to address both liquidity risks and long term sustainability". ($1 = 0.7204 Euros)

(Reporting By Benet Koleka, Editing by Zoran Radosavljevic and David Evans)